Millions owed to developers loom over Hillsborough's move to charge more for growth

Credits held by developers cloud the outcome.

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TAMPA — On this, politicians and activists on both sides of Hillsborough County's political spectrum seem to agree: Developers should pay more for the roads and other projects needed to support new growth.

But even if Hillsborough charges builders more, it might be a while before county coffers see a big boost.

That's because developers hold more than $90 million in credits that they can use to offset future fees. And while a new fee structure could ultimately bring in $35 million a year for roads, sidewalks and transit, county staff says it likely won't until all those credits are used up.

"That circumstance is a product of the system," said David Singer, a land use lawyer with Singer & O'Donniley in Tampa. "I'm not sure anybody loves that system, but it is what we have and so people play by the rules of the system they're in."

How Hillsborough County arrived at this quagmire is complicated but critical to understanding how much money will actually trickle in if commissioners vote to switch from the existing system of impact fees to new mobility fees. A vote could come as soon as next month.

For many years, the county has charged developers an impact fee based on location and type of development.

In some cases, if the new homes or business space significantly increased traffic, the developer was required to widen a road or construct other improvements. In exchange, the developer would earn a credit equal to the cost of the road improvement that could be used to pay off future impact fees.

But in 2009, Gov. Charlie Crist signed a bill that barred counties from requiring developers to build road improvements to facilitate new construction. The county now has to make the improvements and can only charge the developer a proportional share of new traffic it created, which typically amounts to a fraction of the cost.

Instead of getting millions of dollars in road improvements a year, Hillsborough has collected just $6 million from developers under proportional share since 2009.

The county has explored doing away with that system and with impact fees — which actually charge less for new construction in less populous regions.

In its place, the county is looking at mobility fees, which are designed to incentivize redevelopment and growth in economic corridors where infrastructure is already in place. The fee would be higher — potentially three to 10 times higher — than impact fees.

Even with a change, though, the county is very likely to allow developers to use impact fee credits toward the new mobility fee, said Adam Gormly, director of Hillsborough's development services department.

"We may be limited (legally) in our ability to say those offsets that have value now are going away," Gormly said.

Parallel to this conversation is the ongoing debate over whether to ask voters next year to raise the sales tax a half cent for transportation projects. County commissioners are split on that, but there seems to be consensus that mobility fees should be part of the solution to the area's gridlock and transportation woes.

Those who support a sales tax referendum see mobility fees as a means to prove that they're forcing developers to pay a fair share before asking voters to tax themselves. Commissioner Sandy Murman, on the other hand, has proposed mobility fees as part of a package that could replace the sales tax hike altogether.

Murman's plan projects mobility fees could bring in $25 million to $30 million a year for transportation projects, and because a referendum would not be needed, the money would come in as soon as commissioners voted to make the switch.

County staff, though, says that figure is much lower during the transition — closer to $10 million — because of the outstanding credits, which totaled $95 million as of Sept. 30. Newland National Properties, a prominent home developer in the area, holds $12.2 million in credits, far more than anyone else.

Credits can be traded or sold, making it more likely they'll be used. For example, on Nov. 9, Winthrop Retail LLC sold $50,000 in offset credits to Meritage Homes.

However, developers don't have to disclose what they traded credits for. Meaning there's a dark, secondary market where transportation offset credits are bought and sold without county oversight.

Hillsborough is considering an expiration date or an incentive that would encourage developers to use credits quickly so they don't loom over the county for many years, Gormly said. And the county wants to ensure that credits are used in the same area as they were earned, he added, which is the case now.

Developers so far haven't lined up against mobility fees. Singer said he's optimistic the new system will be simpler. He believes it will more directly benefit the development that pays the mobility fee in the form of better roads and transit, especially if it's located in more densely populated areas.

But some worry that a sharp increase from impact fees to mobility fees could mean existing credits aren't worth nearly as much as they are now, said Jacob Cremer, a lawyer who works on land planning issues for Stearns Weaver Miller in Tampa.

"The big concern is working with the county to be able to come up with a fair solution that doesn't disrupt the market that's out there now for the credits," Cremer said. "The most important thing is stability."

The county is holding focus groups with developers and other stakeholders to strike a balance. Commissioners will meet Dec. 9 to discuss some solutions.

"Some folks are going to move real quickly to utilize their entitlements to the fullest extent and some people are going to let them sit," Singer said. "But there's going to be rockiness in any transition. Coming off one system and moving to a vastly different system, there's going to be a hiccup or two."

Contact Steve Contorno at [email protected] Follow @scontorno.

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